You act like IU hasn't been dominating in-state recruiting recently. Hazell did next to nothing in-state the last 4 years so it can only get better from Purdue's side. Hazell didn't do anything at all with in-state recruiting. It doesn't matter if you don't see it as an attractive place because you're not a high school kid. You're from Louisville right? Expect Brohm to be a significant presence there in recruiting as his ties to the area are extensive.
Except for this current year, Indiana hasn't dominated Indiana either. It has been the big boys taking the top kids they want and leaving the rest for everyone else. Primarily Ball State, it appears.
Whether you dominate "in-state" recruiting in Indiana, is not a big deal. Louisville area as well, they've only got a handful of kids, maybe 6-7 that can play at this level, so no big deal. Again, those dominant kids could go to Louisville, but they could head to OSU easily.
The best kids will always get poached by Ohio State, Michigan, ND, Clemson, etc. but on top of that, there are single schools in Florida that have higher and better rated players than the ENTIRE state of Indiana. One school, has 3 5-stars, 10 4-stars, 7 3-stars and 2 2-stars on the roster this year. Sure, it's a football factory, but that is more than the whole state of Indiana, except for a couple of the 3's and then Indiana has more of 2's. But that is compared to just one school.
Central Florida where I live currently has approximately 50 4-star kids, I couldn't tell you how many for the whole state. Indiana has 2 4-star kids (by Rivals) right now total in the state. IU is on a couple of the 2-star kids down here. So dominating Indiana, while nice, doesn't matter much in the grand scheme.
So, is it nice to pick up the good Indiana kids, but the fortunes of Indiana teams will get built with kids from somewhere else.